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INSIGHT 1 Delivering Value through Portfolio Management 06 | 2014


Many organisations refresh their broader business strategy every three to five years


INSIGHT 1 Delivering Value through Portfolio Management

In a world of increased scrutiny on company performance, ethical standards, business practices and a constant drive to increase control and reduce risk, a recurring cycle of defining strategy and associated complex transformation initiatives has become the new normal. • Market confidence in an organisation’s business strategy can be won and lost based on its • perception of an organisations ability to translate strategy into executable plans and then • deliver them. • Many organisations refresh their broader business strategy every three to five years, which • is usually as a result of new leadership appointments wishing to stamp their mark on • the organisation. • Markets are used to this cycle of change but are wary of an organisation’s ability to • implement their strategy. • A centralised Portfolio Management function has the ability to bring discipline and • structure to the central planning process, acting to translate business strategy into • executable plans providing market facing business leaders with confidence in execution. • When implemented in the right way Portfolio Management can help to define clear • business outcomes, make the right “investment bets”, establish consistent standards, • provide oversight, governance and delivery transparency, deploy early-warning mechanisms • to avoid initiatives running into delivery issues and protect overall delivery health. • I often hear arguments against frameworks such as Portfolio Management, stating that • they are an “additional layer of overhead”, “unnecessary bureaucracy” and that these • frameworks “distract teams from delivering on their transformational agenda”.

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Delivering Value through Portfolio Management


Appoint a seasoned change leader to run the transformation agenda and ensure they have a seat at the table


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• I agree with this rhetoric when Portfolio Management is not implemented in the right • way. In certain circumstances I have seen it become a toothless function, usually due to • the absence of a strong mandate from the senior leadership team. • So how do you ensure that a Portfolio Management function is fit for purpose and drives • real value across some of the most important change priorities within an organisation? • The basic concepts of Portfolio Management have to be implemented to an excellent • standard. Once this is achieved, particular focus has to be applied to the following areas • to ensure success: • Appoint a seasoned change leader to run the transformation agenda and ensure • they have a seat at the table and a clear mandate from the Executive Committee • of the organisation • Focus on a smaller number of large transformational initiatives as opposed to • many, to reduce the central administrative overhead associated with managing a • large number of smaller initiatives • The allocation of “top talent” must be prioritised to focus on delivering initiatives • that produce the greatest organisational impact • Build a strong, experienced core team to set the direction from the centre to • ensure that excellence is to applied to all methodology, standards, processes and • tooling within the Portfolio Management function • Take the time to establish a Portfolio Management function that is right first time • and work with divisions to secure “buy in” to the value of the function. Articulate • this in a way that shows the value it will deliver to change teams and the benefit • they will derive from the function e.g. management support to address delivery • blockers, clear escalation paths and reduced administrative overhead. The main • areas to cover would be scope, methodology, roles and responsibilities, governance, • processes and tooling associated with the function • Ensure the Portfolio Managers that you appoint are senior and seasoned enough to • both challenge programme directors, pin point the real delivery risks and issues • and add value through expertise and insights. The appointment of Portfolio • Managers that are “too junior” can have a catastrophic impact on the confidence in • a function which can result in a perception that the function is administrative in • nature and not adding value • Strike the right balance between being perceived as a “police force” and adding • real value to programmes and divisions e.g. use experiences from across the • portfolio to drive issue resolution in other parts

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Delivering Value through Portfolio Management


Focus on defining a baseline of clear business outcomes that can be tracked and evidenced via milestones that are linked to these outcomes


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• Focus on defining a baseline of clear business outcomes that can be tracked and • evidenced via milestones that are linked to these outcomes. Also ensure that the • impacts of missing milestones and business outcomes against an agreed baseline, • are clearly understood in terms of benefits, costs and impacts on key performance • indicators e.g. number of high cost locations exited, the number of applications • reduced across the IT infrastructure estate or the number of data centres • being migrated • Create an environment in which Portfolio Managers are empowered to challenge • programmes and reduce the urge to “just facilitate” • Give the function real teeth through mechanisms such as funding control, to • ensure funds are released in line with milestone achievements • Ensure a clear escalation path is available to seek the support from sponsoring • executives to address issues that may be preventing the delivery of high value • milestones. This mechanism is to be used sparingly • Make Portfolio Management a legitimate career path and breeding ground for • the brightest brains within the organisation • Ensure ALL divisions are subject to the same disciplines and rigor as others. • There should be no “special cases” and consistent coverage and adoption should • be applied to all transformation initiatives • Leverage standard tooling and where possible ensure it is used to its full potential. • The change tool of choice should have the capability to manage everything in one • place e.g. financials (costs, benefits, headcount) and delivery (milestones, risks, • issues and key performance indicators). Use golden source data to drive reporting • consistency and standardisation • Drive true collaboration with supporting internal functions (e.g. Finance and • Operational Risk) and ensure the division of roles and responsibilities is clear • e.g. the interface with Finance to ensure accurate forecasting and benefits • realisation management • Maintain a constant focus on proactive stakeholder engagement, to ensure status • and progress is transparent and clear. This should be underpinned by a strong, • robust and global governance framework • If the time is taken to establish a Portfolio Management function that drives excellence across Portfolio Management basics and pays special attention to the focus areas outlined above, then the capability can be truly invaluable in supporting organisations to deliver on their transformation agenda and to build market confidence in execution capability

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Delivering Value through Portfolio Management


ANDREW@CARBONADO.CO.UK INFO@CARBONADO.CO.UK CAREERS@CARBONADO.CO.UK

07872 463 882

CARBONADO PO BOX 56494 LON DON SE3 3DJ

W W W. CA R B O N A D O . C O . U K

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